Judicial Watch: California Seeks to Revive Failed Corporate Board Gender Quota

(Washington, DC) – Judicial Watch announced today that it filed a 90-page brief in the California Court of Appeal, defending a California trial court ruling striking down Senate Bill 826 (SB 826), the state’s controversial law requiring publicly held corporations headquartered in California to meet government-imposed gender quotas on their boards of directors. The brief urges the Court of Appeal to uphold the lower court’s decision permanently enjoining California’s secretary of state from spending taxpayer money to implement or enforce the law because it violates the California Constitution’s equal protection clause:

After 27 days of trial, 16 witnesses, 174 exhibits, and a trial transcript that spans over 8,500 pages, the Secretary was unable to convince the trial court that SB 826’s gender-based quota satisfies one of the toughest standards the law imposes—strict scrutiny. The law has multiple failings, not the least of which is that it was never intended to remedy alleged patterns and practices of discrimination in the board selection processes of some 625 publicly held corporations headquartered in California.

The trial court concluded the state failed to justify the quota under the constitutional standard required for laws classifying individuals based on sex. California now asks the Court of Appeal to overturn that ruling and revive the quota law.

Judicial Watch filed the gender quota lawsuit in Los Angeles County Superior Court in 2019 on behalf of three California taxpayers. The lawsuit challenged the 2018 law, which mandated every publicly held corporation headquartered in California to have at least one director “who self-identifies her gender as a woman” on its board of directors (Robin Crest et al. v. Alex Padilla (No. 19ST-CV-27561)).

Judicial Watch’s appellate brief argues that California abandoned many of the justifications it previously relied upon to defend the law and now is attempting to recast SB 826 as legislation intended to remedy discrimination—an argument that failed at trial.

Judicial Watch’s brief argues:

The law was sold to the Legislature … as a way to increase women’s representation on corporate boards, if not achieve gender parity, and thereby boost the California economy and protect taxpayers, shareholders, and retirees. Because gender parity, economic benefits, and protecting taxpayers, shareholders, and retirees have never been compelling government interests under strict scrutiny, the Secretary needed another justification for the law when it was challenged in court. But because the legislative groundwork for a “remedying discrimination” compelling state interest had not been laid—and never could be laid—that effort failed. It should have come as no surprise then that the Secretary was unable to defend the law’s gender-based quota, despite having every opportunity to do so.

The brief also asserts: “By several measures, the number of women on the boards of California’s publicly held corporations was increasing before  SB 826’s passage … ”

The trial court specifically rejected the secretary’s claim that the purpose of SB 826 was remedying discrimination and found as a factual matter that the actual purpose was “gender equity or parity,” “gender balancing,” and getting “more women on boards.”

The brief also argues that the secretary cannot refute “that SB 826 is not actually remedial.”

She makes no effort to show that SB 826 was “designed as nearly as possible to restore the victims of specific discriminatory conduct to the position they would have occupied in the absence of such conduct,” … Indeed, “[t]he lack of any effort to limit the benefits of a remedial scheme to those who actually suffered from specific discrimination will be fatal to the scheme.”

The brief also argues, “SB 826 plainly is a quota, and a rigid one at that…. The secretary’s own expert described SB 826 as a quota. One legislative report called it ‘essentially a quota system for private corporate boards.’”

Here, the trial court found no proof that California directly or passively participated in California corporations’ unlawful discrimination against women in board selection or that California corporations even engaged in such discrimination. It also found that SB 826 made no meaningful effort to connect the law’s quota to identified victims of specific wrongdoing, among its many other failings.

“California continues to waste taxpayer dollars defending the indefensible – an unconstitutional gender quota scheme imposed on corporations that only serves to help corporations virtue signal about hiring women for their boards through government-mandated quotas,” said Judicial Watch President Tom Fitton. “The trial court correctly concluded the state failed to satisfy the demanding constitutional standards required for government discrimination based on sex. The Court of Appeal should affirm that ruling and reject California’s attempt to rewrite the purpose of the law after losing at trial.”

In 2020, Judicial Watch filed a separate taxpayer lawsuit in Los Angeles County Superior Court challenging Assembly Bill 979, which Governor Gavin Newsom signed into law on September 30, 2020. That law mandated racial, ethnicity, sexual preference and transgender status quotas for corporate boards. On April 1, 2022, the Superior Court issued a ruling and opinion striking down Assembly Bill 979’s quotas and granting a permanent injunction prohibiting the secretary from spending taxpayer money on the unconstitutional law.

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Source: https://www.judicialwatch.org/failed-corporate-board-gender-quota/